UDF announces subcommittee to formulate liquor policy for 2026-27 fiscal year

The ruling United Democratic Front (UDF) has announced a subcommittee to formulate the new government’s liquor policy for the 2026-27 fiscal year, including whether to allow the production and sale of low-proof liquor. UDF convener Adoor Prakash told a press conference on Thursday that the government would involve all stakeholders to arrive at a consensus before finalising the policy. The UDF seems poised to walk a tightrope between the State’s fiscal exigencies and the social and political sensitivities surrounding the production of relatively low-strength alcohol from fruit, and also the sale of popular alcopops, fruit-flavoured, ready-to-drink canned sodas containing a minimal quantity of alcohol. According to sources, the UDF subcommittee has to factor in that the independent revenue of provincial governments, including Kerala, comes mainly from liquor and fuel taxes, with the nationwide goods and services tax (GST) supplanting a range of State levies. Revenue outflowsMoreover, a significant portion of the legal alcohol consumed in Kerala is imported from other States, resulting in substantial revenue outflows, another financial fact the subcommittee would reportedly weigh with due gravity. According to UDF insiders, the government was loath to further raise the State cess on fuel, given the spectre of price rises, higher commuting costs, and inflation. Moreover, the subcommittee would have to navigate politically choppy waters when finalising the UDF’s liquor policy. For one, Chief Minister V.D. Satheesan, who holds the Finance portfolio, had somewhat unwarily strayed into a social and political minefield by batting for the sale of low-proof starter drinks at a relatively lenient sales tax rate (120%) compared to the prohibitive 250% levy on hard liquor. Rollback soughtThe UDF government’s touted attempt to strike a balance between populism and fiscal prudence ran into strong political and social headwinds, with the Church and Muslim social organisations opposing the move. The government also came under criticism from within the Congress, with several leaders criticising Mr. Satheesan for announcing the policy without consultations in the UDF. The former KPCC president, V.M. Sudheeran, had demanded an immediate rollback. The LDF accused the government of corruption and said the Budget proposal to “give a tax reprieve to liquor majors” would cost the State exchequer an estimated ₹600 crore annually. Various left-leaning trade unions have also objected to the proposal, claiming it would sound the death knell for the ailing traditional sector. Published - July 30, 2026 07:42 pm IST